I have been a Realtor in the sunny Okanagan Valley for over 5 years now. I am not a new agent and my years of experience along with the over 20 million dollars worth of Real Estate transactions that I have presided over have taught me well. I am a laid back guy and I value interpersonal relationships and experiences above all. I look forward to meeting you:-)

Friday, July 29, 2011

Average House Prices a Misleading Gauge of the Health of the Canadian Real Estate Market: CIBC

Detailed analysis shows a highly segmented market that will see prices drop over time, but preconditions for a market crash don't exist

TORONTO, July 7, 2011 /CNW/ - The Canadian housing market is becoming highly segmented and multi-dimensional which is making traditional measures, like average prices, increasingly irrelevant in gauging the health and state of the sector, finds a new report from CIBC World Markets Inc.

"Glancing at popular metrics such as the price-to-income ratio or the price-to-rent ratio, it is tempting to conclude that the housing market is already in clear bubble territory and a huge crash is inevitable," writes Benjamin Tal, Deputy Chief Economist at CIBC, in his latest Consumer Watch Canada report.

"Tempting, but probably wrong. When it comes to the Canadian real estate market at this stage of the cycle, any statement based on average numbers can be hugely misleading. The truth is buried in the details—and there the picture is still not pretty, but much less alarming."

He notes that while the average house price in Canada rose 8.6 per cent on a year-over-year basis in May, that number slows to 5.6 per cent if you take Vancouver out of the picture. Remove Vancouver and Toronto and the average price increase drops to 3.7 per cent.

By digging into the details on the high profile Vancouver market he found that the gap between average and median prices is reaching an all-time high. While the average house price climbed 25.7 per cent on a year-over-year basis to more than $800,000 in May, he found that by removing properties that sold for more than a $1 million there was a much more moderate price appreciation in the market. It also reduced the average sale price by $220,000 to just over $590,000.

"What makes Vancouver abnormal is the high end of its property market," says Mr. Tal. "And in this context many, including Bank of Canada Governor Mark Carney, point the finger at foreign—mainly Asian wealth—as the main driver here."

Data on the extent of the role that Asian investors have played in Vancouver housing prices is quite limited. Mr. Tal's analysis of data obtained from Landcor Data Corporation suggests that only 10 per cent of the nearly 4,500 transactions involving foreign money over the past five years were above the $1 million mark, with an average purchasing price of just under $600,000.

According to the information provided by Landcor, foreign money accounted for only 2.6 per cent of all sales during the same period. However, Mr. Tal believes that could be a serious underestimate, as it is based on where property tax assessments are mailed, and would exclude offshore buying on behalf of children or other local proxies. "There are many reasons to believe that a significant portion of what is perceived to be buying by offshore investors is, in fact, driven by Chinese immigrants that are integrated into the community but still maintain strong links to mainland China, with many residing and working in China while their family establishes roots in B.C."

"Looking beyond the average price numbers reveals a highly segmented and multi-dimensional market that is probably influenced by different forces," says Mr. Tal. "But even a multi-dimensional market can overshoot—and the likelihood is that prices in the Canadian market and its sub-segments are higher than what can be explained by factors such as income growth, rent and household formation. Given that, the housing market will eventually correct. The only question is what will be the mechanism of that correction."

Mr. Tal feels the price correction in Canada will be gradual as the two key triggers for a price crash - a significant and quick increase in interest rates and/or a high-risk mortgage market that is very sensitive to changes in economic factors - are not at play in Canada.

"In Canada, a sharp and brisk tightening cycle is unlikely. The market expects a gradual increase in short-term rates in the coming years. The rising number of mortgage holders that carry a variable rate mortgage will be the first to feel the pain. But if history is any guide, they will return quickly to the comfort of a five-year fixed rate the minute the Bank of Canada starts hiking."

He also believes that the country is in relatively good shape when assessing the two sub-segments of the mortgage market that traditionally account for most defaults: mortgage holders that carry a debt-service ratio of more than 40 per cent and those with less than 20 per cent equity in their house.

Just over six per cent of households have a debt service ratio of more than 40 per cent—a number that has risen by a full percentage point since 2008. "However, this ratio is still well below the ratio seen in 2003, when the effective interest rate on debt was more than a full percentage point higher, and no correction in house prices ensued," adds Mr. Tal.

"All other things being equal, even a 300-basis-points rate hike by the Bank of Canada would take this ratio to only just over eight per cent. Not surprisingly, Vancouver has the highest ratio of households with high debt-service ratio, followed by Toronto."

A little more than 17 per cent of the Canadian residential real estate pool is in properties with less than a 20 per cent equity position, a number that has been rising over the past few years. More than 80 per cent of households with less than a 20 per cent equity position are first time buyers.

"Digging deeper and looking at the households with both low equity positions and high debt-service ratios, we found that this fragile segment of the market accounts for only 4.6 per cent of total mortgages—a number that has been on an upward trend over the past few years," says Mr. Tal. "Shock the system with a 300-basis-points rate hike and that number would rise to a still-tempered 6.5 per cent. Historically, even in that group, the default rate has been well below one per cent. Thus, short of a huge macro shock, there does not appear to be the risk of large scale forced selling that would typically be the trigger for a precipitous plunge in the national average house price.

"As a result, while house prices are likely to adjust as interest rates eventually climb, the national pace of any correction is likely to be gradual. That could still entail a period in which housing underperforms other assets as an investment class, until rising incomes and a tame price trajectory bring the market back to equilibrium."

First time home buyers get an exemptions from paying the property transfer tax and this "tax break" can save FTHB thousands of dollars. However, First Time Home Buyers need to carefully ensure that they qualify for this tax savings. Persons claiming a FTHB credit are regularly audited by the PTT Office.

The Criteria to Qualify are as follows;

Purchaser must:a) be a Canadian Citizen, or a permanent resident as determined by Immigration Canada,b) have lived in British Columbia for 12 consecutive months immediately before the dateyou register the property, or you have filed 2 income tax returns as a British Columbiaresident during the 6 years before the date you register the property,c) never owned an interest in land anywhere in the world at anytime,andd) you have never received a first time home buyers’ exemption or refund.

The Property you purchase must also qualify as follows:a) the price must be less than $425,000b) the land must be less than 0.5 hectares (1.24 acres), andc) the property will only be used as your principal residence.

Importantly, if you sell the property or acquire a new principal residence within 12 months of purchase, you will lose the exemption and the Province will demand for the tax to be paid.

Wednesday, July 20, 2011

Every now and then, you’ll get a water leak which has made it’s way into a drywall, gyprock or sheetrock wall - usually in a basement. This is classic scenario where black mould can establish itself... basement setting, limited air circulation, drywall material, etc. The longer the wall remains wet, the greater the chance of mould growth. If you have decided to explore the possibilities of fixing this yourself, here are a few guidelines you can follow.

It is best if the wall does NOT dry out before you start removing drywall. Dry mould spores are more likely to get into air flow in the home - so keep a spray bottle handy. Scribe a horizontal line with a sharp blade at about 2 inches above the finished floor, slightly higher than the 11⁄2" high wood sill plate behind the drywall, but not higher than typical baseboard (in some cases, you might have to go at least as high as the "wet" part of the wall). When you cut the drywall, try not to cut the vapour barrier that is behind the drywall. If the wall was built properly, there will be a vapour barrier on the warm side of the insulation.

Once a strip of drywall material is carefully removed, examine it for mould-like material. If you see a black substance*

, isolate the area, put on a Hepa mask and slowly and carefully place the material into a plastic garbage bag. With drywall removed at this height, interior wall insulation should be visible on top of the sill plate. Probe behind the vapour barrier and see if there is any wet insulation. If any wet material is found, you'll want to take another strip of drywall material off.

The next strip should be at about 121⁄2 inches off the floor. Again, try not to cut the vapour barrier. If you do cut or remove the vapour barrier, it will have to be replaced later and taped at the seams - not always an easy task.

If this new area is dry along the cut, bag the removed drywall. If there is any wet insulation, this should be cut out and carefully removed and bagged as well. To get at the insulation, split the vapour barrier vertically, preferably along one of the wall studs - makes for easier taping later. Once you are down to bare wood and concrete, and there is no sign of moisture or black staining, then let the area dry out. You can use a fan to help speed the process, first making sure there are no signs of mould.

After a few days of drying, you can replace any removed insulation, fix and tape any damaged vapour barrier and replace and tape the removed drywall.

* black mould-like material on wet drywall is one of the the worst kinds of mould and can be hazardous to your health. If in doubt, now is the time to decide if you want to do-it-yourself, or call in a professional.

Tuesday, July 12, 2011

To view 21 high definition photos and get much more info on this property please visit www.260davieroad.com To set up an appointment to view please call Trever Florko @ 250-859-5990

Court Ordered Sale! 3 bedroom and 1.5 bath home located on a quiet street in a family friendly neighbourhood. Close to all amenities with suite potential. Home is on a large lot with fruit trees, small shed and offers great floor plan just need to bring your renovation ideas! Official Community Plan supports low density multi-family in the area. Home is on a large lot and offers great floor plan, so bring your renovation ideas!

Wednesday, July 6, 2011

Sometimes a parent decides to buy a place for their children while they hit the books in university or college. It can be a good alternative to paying thousands of dollars toward residence fees or rent. Just look at the math:

Student rent of $500 a month = $6,000 a year = $24,000 over 4 years of school.

That money could go to your mortgage instead as an investment for you.

In Kelowna, for example, you can buy an NEW one-bedroom condo for about $195,000. (HST included!) Or, buy a 2-bedroom for $240,000 and let your child's roommate help cover the mortgage by paying rent. Let's assume you pay 20 per cent down. Here's an example of what your monthly costs could total when mortgage rates are low:

Cost

1-bedroom

2-bedroom

Mortgage payment

$800

$1,000

Condo fees

$350

$450

Property taxes, maintenance

$300

$400

Total:

$1,450

$1,850

Think about it: if your child rents a place, your money is helping the landlord pay his or her mortgage and other costs. If you buy a place instead and rent it to them, you have a real estate investment with a guaranteed tenant: your child. If the investment goes up in value, you will make money. Just remember that those gains will be taxed.

Also remember, mortgage rates and other costs change, and these changes will impact the numbers and your decision.

Things to consider before you decide:

You can buy the property in your name, in your child's name, or both. If you buy the property in your name, you should consider:

The rental income you charge can pay a lot of your costs. Just remember you have to declare that income on your tax return.

As a landlord, you can also claim many of your expenses, including mortgage interest. Assess your costs carefully before you buy. They will vary with the local real estate market, mortgage rates and other factors.

Plan for some vacancies. Your child (or their roommate) may not stay in the condo over the summer break. Are you really going to ask them to pay rent if they are living somewhere else for a few months?

Remember that you will own a greater share of the equity as you pay off the mortgage. And, the value of the condo may rise over time. This can offset your costs. But whether you do more than break even depends on what happens to housing prices in the area.

There are other benefits, too. Your child won't need to look for a different place to live each year. They also won't have to worry about subletting every summer. And their furniture won't be coming back with them if they live at home over the summer break. Not a bad deal.

Remember: you may not make money if you buy a student condo.But there are other reasons you may decide to go ahead. At the very least, you can provide your child with a nice place to live in a good neighbourhood while they go to school.